S20 of the Limitation Act 1980 provides a time limit of 12 years on actions to recover mortgage loans. This starts from the date on which the right to receive the money accrues. 

The issue the Court of Appeal had to decide, however, was not when the starting date accrued because by whatever calculation Bradford & Bingley were out of time, but the meaning of s29(5), which provides that time starts running again from the date, if any, on which the debtor “acknowledges the claim or makes any payment in respect of it”.  By s30 an effective acknowledgment is required to be in writing and signed by the debtor.

In a short judgment, the Court of Appeal held the there had been both acknowledgment and part payment The defendant had in the previous 12 years been paying £10 per month albeit it would have taken until 2402 to discharge the debt in full. Proof of part payment would have been sufficient within the previous 12 years to start time running again for limitation purposes. Accordingly the proceedings were not statute barred.

Whenever a tenant pays rent to a landlord that is non-resident, or to a letting agent who then pays the rent to a non-resident landlord, the non-resident landlords scheme comes into play.

Essentially, the tenant or letting agent needs to deduct tax before paying rent to the landlord and account to HMRC for this. The landlord will still need to complete a tax return which might result in more tax or a refund. It is possible for landlords to register to receive rent gross of tax. This applies to all landlords, including individuals, companies, partnerships or trusts.

On 10 March, HMRC have published the first of their “Information Bulletins” for non-resident landlords, designed to provide information about changes in HMRC practice and some FAQs: http://www.hmrc.gov.uk/cnr/nrl-bulletin1.pdf

If you need help in registering for the non-resident landlords scheme or in understanding how this applies to you, please feel free to contact me.

Peter Mandelson (the Business Secretary) has since proposed various reforms to takeover laws including:

• raising the voting threshold required to approve a hostile bid
• denying short-term shareholders such as hedge funds the right to vote during a bid period
• giving bidders less time to formally commit to their offer (“put up or shut up”) so as to reduce the length of time a takeover bid takes to complete
• requiring bidders to set out publicly how they intend to finance their bids over the long term and how they intend to make cost savings

The proposals have, however, received a mixed response. Some commentators are in favour of protecting companies from hostile bids but others would prefer takeover laws to remain the same so as to allow a company’s shareholders (rather than its board of directors) to determine the outcome of a takeover bid.

This is likely to be a highly political budget and predictions are flying as to what we can expect. These range from no major changes, to increases in the rates of VAT and capital gains tax.

We will post our views on the major announcements on Budget Day on this site on the day.

The Court held that rent would continue to be payable as an administration expense quarterly in advance under the terms of the two leases whilst the administrators retained or used any part of the premises for the benefit of the administration.  Applying the principles imposed in liquidations, the Court held that an administrator electing to hold leasehold premises could do so only on the terms and conditions of the lease, and any liability incurred while the lease was being enjoyed or retained for the benefit of the administration was payable in full as an expense.

 However, such unsalaried positions may breach the requirements of the National Minimum Wage (NMW).

Most workers in the UK are entitled to the NMW and  employers may be breaking the law if they do not pay the statutory minimum amounts. The current rate of NMW is £5.80 per hour for workers aged 22 years and older. There is also a “developmental rate” of £4.83 per hour for workers aged 18 to 21 inclusive and £3.57 for workers under the age of 18 who are no longer of compulsory school age.

 As a general guideline, if you have a contract of employment you are an employee and therefore a worker for the purpose of the NMW rules. If you don’t have an employment contract you could still be a worker and entitled to receive the NMW if you do work personally for someone else.

 There are people who are not entitled to the national minimum wage and these include the self employed, volunteers and voluntary workers, work experience as part of education and higher education, certain apprentices, members of the armed forces, share fishermen and prisoners.

 It is important to note that just because you volunteer for a role, like the position I saw advertised, does not necessarily mean that you are not entitled to the NMW. If the arrangements under which you ‘volunteer’ effectively mean you have an employment or worker’s contract you may be entitled to the NMW.

It is understandable, in the current economic climate, that employers are looking at making cost savings, but employers should think carefully at whether the NMW applies.  If you are in any doubt as to whether the NMW applies to your voluntary, or other, workers, do not hesitate to contact us.

Meeten Nathwani, Hillier Hopkins LLP and Craig Harrison, Matthew Arnold & Baldwin will co-chair the discussion on:

Employee Share Schemes
-why would a share scheme benefit your business?
-how can a share scheme incentivise your staff?
-when is the best time to implement a scheme?
-what sorts of schemes are available?
-what tax reliefs are available?

The seminars will take place at the Hillier Hopkins Aylesbury office.  

The arrival time is 8.15am for 8.30am start. We aim to finish at approximately 9.30am.

The Advocate General, who provides opinions to the European Court of Justice has delivered an opinion in the joined Dutch cases of X Holding BV and Oracle Nederland BV (C-538/08 and C-33/09), concerning the inability of businesses to claim input tax on business entertaining expenditure that applies in the Netherlands and if this contravenes EU regulations. In the Advocate General’s opinion it does.

UK VAT rules also block recovery on input tax spent on goods and services used for the purposes of business entertaining (excluding staff). If the Dutch case goes in favour of the taxpayer, as is expected, the HMRC will need to consider UK policy.

If there is a taxpayer victory, then the UK position is likely to take several years to resolve, if HMRC test the first claims in court. UK businesses with entertaining expenditure should therefore consider submitting protective claims to HMRC going back to April 2006, the current time limit for retrospective VAT adjustments, following publication of the European Court’s judgement.

In Gavin Goodale v The Ministry of Justice, Queen’s Bench Senior Master Whitaker dealt with exactly this problem.

The Senior Master ordered the defendants to make a reasonable search for documents, including documents contained in electronically stored information. In so doing, he required them to complete the draft e-disclosure questionnaire which is presently being considered (together with a draft practice direction on e-disclosure by the Civil Procedure Rules Committee (CPRC). The completed questionnaire would provide the claimants and the court with the necessary information in a structured manner, regarding any issues that might arise in relation to searches for electronic documents. This is the first known case in which the draft e-disclosure questionnaire has been used as a tool in case management. The Master attached the questionnaire in a schedule to the judgment, even though it has not been finalised and approved by the CPRC.

The general rule for standard disclosure under CPR31.6 requires a party to disclose the documents on which he relies, the documents which adversely affect his own case or adversely affect another’s party’[s case or support another party’s case and documents which he is required to disclose by a relevant practice direction. CPR31.7 requires a party to make a reasonable search search for these documents. What constitutes a reasonable search is fact-specific. There are additional factors to bear in mind when scoping and conducting a reasonable search for electronic documents, set out in Practice Direction PD 31.2A.

Electronic documents include email and other electronic communications, word processed documents and databases. In addition to documents that are readily accessible from computer systems and other electronic devises and media, the definition covers those documents that are stored on servers and back-up systems and electronic documents that have been “deleted”. It also extends to additional information stored and associated with electronic documents known as metadata.

Parties to litigation should from the outset discuss any issues that may arise regarding searches for and the preservation of electronic documents. This can involve the parties providing information about the categories of electronic documents within their control, the computer systems, electronic devises and media on which any relevant documents may be held, the storage systems maintained by the parties and their document retention policies. Where there is disagreement, the matter should be referred to a judge for directions at the earliest practical date, if possible at the first Case Management Conference.

The Senior Master’s judgment also provides a number of useful reminders as to the general approach which should be taken when dealing with e-disclosure. In particular, he emphasised the importance of taking a staged approach to avoid running up unnecessary and disproportionate costs and explains how this can be done.. The judgment is useful for a number of reminders that are highly relevant to the general approach to disclosure of electronically stored documents. Since every case is different, you should take specific advice on each search as it arises.

Cotswold Geotechnical Holdings is accused over the death of 27 year old employee Alex Wright of Cheltenham. The geologist died in September 2008 when a trench collapsed on him as he collected soil samples in Brimscombe. The Company director, Peter Eaton, also faced a charge of gross negligence manslaughter.

The trial represents the first time a company has been charged under the Corporate Manslaughter and Corporate Homicide Act 2007. The firm has been charged with the criminal offence of corporate manslaughter and the company director, Mr Eaton, has been charged with the common law offence of gross negligence manslaughter. If convicted, the director could be jailed for life. The maximum sentence for his firm, which also faces charges for health and safety breaches, is an unlimited fine.

The Corporate Manslaughter Act 2007, which came into force on 6 April 2008, is a landmark law and was introduced to make corporate manslaughter cases easier to bring. For the first time, companies and organisations can be found guilty of corporate manslaughter as a result of serious management failures resulting in a gross breach of a duty of care.

Penalties that companies face include unlimited fines, remedial orders and publicity orders. A remedial order will require a company or organisation to take steps to remedy any management failure that led to a death. The court can also impose an order requiring a company or organisation to publicise that it has been convicted of the offence, giving the details, the amount of any fine imposed and the terms of any remedial order made. The publicity order provisions will not come into force until the Sentencing Guidelines Council has completed its work on the relevant guidance.

The Act is not retrospective and only applies to deaths that have occurred from 6 April 2008 onwards. Deaths that occur before 6 April 2008 will continue to be covered by the previous law on corporate manslaughter. Further information on the Act can be found here.

UPDATE: Bristol Crown Court has further adjourned the trial. Press reports have suggested that it will not commence until Autumn 2010, due to the ill-health of Mr Eaton.

The High Court ruled that the total liability in contract included liability for contractual interest. However, any interest applied by statute was a discrete statutory liability arising from the exercise of the court’s discretion and was therefore not covered by the contractual cap on liability.

The High Court also ruled on other matters that emphasised the need to draft exclusions or limits on liability absolutely clearly beyond doubt. Failure to do so could result in the liability clause being interpreted against the person looking to rely on it.

One clause said: ‘Neither party shall be liable to the other for any indirect or consequential loss (including but not limited to loss of goodwill, loss business[…]) arising out of or in connection with this Agreement.’ Endsleigh argued that the specific types of losses in brackets could apply to direct or indirect losses, but the court rightly disagreed. The phrase ‘including but not limited to’ gave a clear indication that those losses were a type of indirect or consequential loss.

More surprising, perhaps, was the court’s interpretation of the following clause: ‘Endsleigh will not be liable to Markerstudy for any indirect or consequential loss or loss of profit or loss of business arising out of…’ The court ruled that only indirect loss of profit or business was covered by the exclusion. Endsleigh argued that the specified types of loss were free-standing from the phrase ‘any indirect or consequential loss’ and could therefore be direct or indirect loss of profit or loss of business, but the court rejected that argument too.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of www.Upload-IT.com, comments: ‘Some of the court’s findings here are surprising. However, what is not surprising is that if someone wants to exclude or limit its liability, the clause has to be drafted very clearly – more so, perhaps, than many people realise. Failure to do this could result in not having liability limited or excluded in the way intended. Since the liability clause nearly always crop up in the event of a dispute, it is arguably the most important clause in the contract, but the one drafted incorrectly most often.’

Many first-time buyers have felt the pinch, with the end of the stamp duty holiday for properties up to £175,000.00 taking place from the 1st January 2010. Now all properties over £125,000.00 attract stamp duty liability. This is an additional cost people are having to budget for from the outset, particularly for many of my first-time buyers who are purchasing new build properties off-plan and due to complete in 2010. Many buyers in the marketplace have wrongly assumed that an exchange of contracts prior to the change meant they avoided this cost – you should be aware that the stamp duty liability comes about on the completion date. First-time buyers are trying to save hard for their deposit, valuation fees, and legal costs, and the stamp duty for the lower end of the market does add to that struggle.

With first-time buyers trying to take that first step onto the property ladder, and some not having the large deposit required, I am seeing more shared-ownership and shared equity schemes through first-time buyer, government-led initiatives. Interestingly, I am even working with first-time buyers purchasing on one Milton Keynes new home development, where the developers are offering their own competitively rated mortgages. This is encouraging news for the first-time buyer, enabling the market to continue to grow and hopefully making moving home for everyone affordable again.

Recent market trends have meant I also see more of my first-time buyers using ‘the bank of Mum and Dad’, receiving financial assistance from their parents in order to take their first step; or, this could just be the parents wanting their children to finally fly the nest! It has been reported in the press that the average age of the first-time buyer has risen from 29 to 30 in 2008, and many confirmed that this move was made with the assistance of their parents. So our next generation property owners are starting to buy later and live at home for longer; after all, it’s cheaper to live at home than it is to buy and rent!

If you need any advice on the first-time buyer initiatives, please contact me at sarah.wilkins@mablaw.co.uk

In the case in question, a German law prohibited promotions where prizes were won by chance and where purchasing an item was a condition of entry. The European Court of Justice decided that those sorts of promotions were commercial practices within the scope of the Directive. It said that the Directive was a total harmonisation Directive, meaning that it was exhaustive of all illegal commercial practices. Building on an earlier case of VTB-VAB v Total and Galatea v Sanoma Magazines, the ECJ ruled that the 31 practices described in the annex to the Directive was an exhaustive list of all commercial practices which could be considered to be unfair. Since the particular German sales promotion law was not on that list and did not otherwise offend against the provisions of the Directive, it could not be illegal, so the particular law was invalid.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of www.Upload-IT.com, comments: ‘This case seems to dramatically expand the scope and effect of the Directive. The Directive had been considered as a useful tool to guard against unfair and aggressive selling practices. However, it seems to go further and say that if a particular commercial practice is not a problem under the Directive, then any Member State’s laws which go further than the Directive are no longer valid. The UK has a relaxed set of laws dealing with sales promotions, compared to many of our continental neighbours. However, if the validity of laws surrounding sales promotions are now questionable, then this begs the question of whether the Gambling Act – which prohibits illegal lotteries, whereby people pay something for the chance to win a prize – is also invalid. Anyone charged with operating an illegal lottery contrary to the Gambling Act should consider running the argument that UK gambling laws are no longer valid.’

If you have been given a compromise agreement, it is a legal requirement that you must have it explained to you by an independent adviser, normally a solicitor, before the agreement becomes binding.

I have extensive experience in advising employees on compromise agreements. Having dealt with hundreds of employers over the past 12 months both in and around Watford, and nationwide, I know exactly what should and should not be in your agreement.

Your employer will normally contribute towards your legal costs and usually this contribution covers your legal bill.

 If you have received a compromise agreement from your employer, or it looks likely that you are about to receive one, just drop me a line on 01923 690 034 or Rebecca.Fox@mablaw.co.uk to book an appointment for practical and clear legal advice.

In the High Court action, the Court threw out the defendant’s argument that it was simply using its ‘own name’. Although there was an ‘own name’ defence that could apply to companies as well as to individuals, the defendant did not use its full company name (apart from the ‘Ltd’ bit) as it was required to do to take advantage of this defence but it instead used a much shorter version of its name. In any event, the Court said that its use had not been ‘in accordance with honest practices in industrial and commercial matters’ as it should have known of the existing registered trade mark when starting up.

On appeal, the Court of Appeal has agreed with the High Court ruling, but not with all of its findings. The Court of Appeal said that a company could claim that its trading name benefited from the ‘own name’ defence. Whether it was the company name or trading name, though, the position had to be that the use was in accordance with honest practices. The right to use one’s own name was not an absolute right. Much depended on the trading name adopted and in what circumstances it had been adopted. In this particular case, the use of the same name as the already established brand did not amount to honest practices as the infringer did not already have concurrent rights in the name, so the ‘own name’ defence was thrown out.

The optimism in the market place has been gathering momentum, with Taylor Wimpey announcing an operating profit for 2009 of just over £40m. Pete Redfern, Taylor Wimpey’s chief executive, has been quoted in the press as saying that he believes the UK housing market has strengthened “significantly” over the past year. The company has also described UK trading as “encouraging” in the first two months of 2010, with continued improvement in visitor levels, sales rates and cancellations. Persimmon are another large developer restoring some confidence in the New Homes market after announcing a pre-tax profit of £78m. The company was reported to have made a huge £780m loss in 2008, but an increase in demand and prices in the second half of 2009 is seen to be responsible for the improvement in its full-year figures.   

It is without a doubt great to hear that the long-struggling developer sector is starting to see a return to profit, although most developers remain cautiously optimistic, with new-build sales still struggling with down valuations by the mortgage lenders. This disturbing trend has caused developers to lose many sales and many first-time buyers have been unable to get their foot on the housing ladder. 

Persimmon is one of the many housebuilders who benefit from the first-time buyers government funding, with 2,700 of its plots receiving funding from the scheme, and this has been a positive way of supporting more plot sales. Persimmon’s chief executive, Mike Farley, has said that the prices for their new homes had held up, with a rise of 1 per cent in the first two months of 2010 , whileplot sales were up 7 per cent on the same period last year. But as for predictions for 2010, Mr Farley said that he expected the prices to rise by between 2 per cent and 3 per cent over the course of 2010 – gently optimistic some would say. 

Barratt Developments and Galliford Try reserve their judgment as to whether the recent rise in demand would continue into 2010. Barratt has said that it had cut its losses for the last six months of 2009 from £678.9 million to £178.4 million after rises in their new homes prices and sales. Galliford Try, a smaller developer largely building in the South East, has reported a similar trend, with their half year pre-tax figure of £6.4 million up from a loss of £26.9 million in the six months before. However, Galliford has expressed concerns that government funding for affordable housing, which accounted for a fifth of its completions in the last six months of 2009, will fall away as a result of housing budget cuts. Will the government cuts further damage the recovery from the biggest downturn most of us can remember?

Both Barratt and Galliford have made the suggestion that Santander’s welcome move to increase its loan limit for first-time buyers to 90 per cent for new properties is a sign that the mortgage market is set to improve in 2010.  So are we ready for a recovery in house prices? As mortgage availability improves and buyers confidence is restored there will be strong demand for new properties, particularly as many developers have slowed the pace of their building. News like this from large developers could spell the start of the long-awaited recovery of the UK housing market.

In order to qualify for the hall of shame, individuals and companies will need to deliberately evade more than £25,000. Because the measure will be applied only for evasions on or after April 1 2010, it is not expected that any names will appear there until 2011.

This is similar to a measure taken in Ireland where a quarterly list of revenue defaulters is published. That list actually includes home addresses and occupations and covers even relatively small amounts.

The HMRC list will only cover deliberate evasion of more than £25,000, and tax evaders can avoid being published by paying up quickly.

The impact of the measure will, to some extent, depend on who the individual or company is – some people with be more bothered than others. Undoubtedly those in the public eye or those in certain professions are going to be much more concerned than others. On a similar vein, I would expect that most visitors to the site (after the initial excitement) are going to be journalists, so for those not in public roles this may be less of a deterrent.

Avatar has grossed $2.2 billion worldwide and that figure is still rising. What if another film were to capture the same essence of that film and be released prior to Avatar, or a member of Cameron’s team leaked the script of Avatar on the internet before its cinema release?  20th Century Fox will certainly not be impressed to see their profits dwindle. After all, film-making is big business.

What is a key asset in business? Information.

You accumulate it and nurture it by cultivating personal relationships with customers and place it on a database. You may even create or invent something which can amount to a “trade secret”. Coca Cola, anyone?

But do you protect it? And if so, then how?

The theft of confidential information (i.e. information that has a quality of confidence about it and not in the public domain) does not require hi-tech equipment in order to obtain it – we are not in Mission Impossible and Tom Cruise’s Ethan Hawke does not need to be winched into some hi-tech facility to take the information!

In its crudest form, an employee can take files home and photocopy them or download information onto a disk or USB stick. They may also try and divert business opportunities to a competitor that they hope to join.

 As a business you have mechanisms to protect the information, namely:

1. Ensuring you have the proper contractual documentation: express clauses of confidentiality, intellectual property and restrictive covenants, or have a separate non-disclosure agreement;
2. Rights arising under various intellectual property rights, such as database rights;
3. Implementing practical measures, by having systems in place to prevent the downloading of information on a USB stick.

Whatever industry you are in, competition is a given; but you know what – it has to be fair.

Ask yourselves this: if you were in James Cameron’s shoes, would you be happy if, say, George Lucas made a similar film and was hailed as a ‘visionary’ of the new decade, broke all box office records, made millions in merchandising, and, come 7 March, became “King of the World”?

Identify what your confidential information is and protect it.

For further information, please contact me at krishna.santra@mablaw.co.uk

Sal has already written about the event on her blog, http://www.salbrinton.org/

The deleagtes were drawn from the local HR business community and were able to net work with fellow HR collegues to share ideas and experiences. Our next meeting will be in June.  Please email Heloise Paull (heloise.paull@mablaw.co.uk) if you work in the HR sector and would be interested in attending.

Mike Delaney

Partner – Employment

In addition, the ASA objected to the fact that the survey had asked people to give the products a mark out of 10 and although Hovis’s average was higher it was not necessarily chosen preferred by more people.

Consequently, the ad breached the CAP Code. The CAP Code is a code of practice governing the content of adverts and marketing communications, and it is administered by the ASA. Although the Code does not have legal force, it is best practice to comply with it, as failure to do so can result in bad publicity and ultimately an inability to obtain advertising space.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of www.Upload-IT.com, comments: ‘Although this ruling is not binding on English courts, it is of great concern that any court anywhere in the European Union could have come to this decision. If not successfully appealed, it could change the Web 2.0 as we know it and make anyone more cautious if they are involved with acting as a mere host or intermediary of content supplied by other people. The fact that there is criminal liability is even more concerning – it’s one thing risking being sued; it’s another if people at a responsible business risk jail terms.’

Jim Rohn  (Treasury of Quotes by Jim Rohn) 

It has been an interesting week at No. 10 and probably not what the Labour Party want in an election year. However, the Prime Minister, himself, has been put under the spotlight due to the allegations that there is a culture of bullying at No. 10. Last week, Gordon Brown was on the GMTV sofa being interviewed by Ben Sheppard. He said he “was not a bully” but that he “was a hard taskmaster…”

This is certainly a dilemma indeed, is it not, when the head of an organisation may be subject to such allegations of bullying and harassment?

What can one do, especially if that organisation is small and the CEO/MD is the only person within that organisation who runs the company?

Employers may not realise this, but there is a slight distinction between bullying and harassment.

With harassment, this (usually) centres around unwanted, or offensive, intrusive behaviour with a sexual, racial or physical component. It is unwanted physical, verbal or non-verbal conduct which has the purpose or effect of violating a recipient’s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment for them. Bullying is intimidating, malicious or insulting behaviour, which through the abuse of or misuse of power, makes the recipient feel vulnerable, upset, humiliated and threatened.  Bullying is often seen as a form of harassment.

As such, bullying and harassment do give rise to a number of legal issues. Employers, remember:

1. You have implied duties in a contract, such as, but not limited to, a duty to provide a safe working environment and a duty to provide redress of grievances;
2. You may fall foul of discrimination legislation if you do not protect employees from harassment;
3. Beware of the Protection of Harassment Act 1997, where an employer is vicariously liable for conduct amounting to harassment by an employee; and
4. Have a clear policy. Set out clearly if the allegation is against a director/CEO; who does the employee direct the grievance to?

Bullying and harassment should not be tolerated in the workplace. However, managers should not live in fear of being firm and driven to maximise the potential in their employees.

If a senior member of your staff, or even the MD or CEO, is accused of bullying and/or harassment, you must deal with it. If you do not deal with it promptly, it may end up costing the company thousands of pounds.

The CAP Code is a code of practice governing the content of adverts and marketing communications, and it is administered by the ASA. Although the Code does not have legal force, it is best practice to comply with it, as failure to do so can result in bad publicity and ultimately an inability to obtain advertising space.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of www.upload-it.com, comments: ‘This is a cop-out by the Parliamentary Committee. A few years ago, they recommended that the Government should pass a new privacy law so that people knew where they stood. In the last couple of years, there has become even greater uncertainty as to what the press could say and in what circumstances without infringing people’s privacy rights. Now, more than ever, is a need to clarify the law in this area. Yet, the Committee has failed to come up with a decisive recommendation.’

If one spouse or partner has a higher income than the other, this presents an opportunity for tax planning by diverting more of that rental income to the spouse with a lower rate of tax. This balancing exercise can give rise to significant savings opportunities with careful tax planning. This will be of particular importance come 6 April with the introduction of the 50% rate of tax, but is also relevant for those whose income is taxed at 40%.

If you would like some advice on how best to achieve this, please contact Shimon Shaw or James Odds.

The purpose of Acta is to protect intellectual property rights in software, music, video and pharmaceutical products against unlawful copying. Hustinx would like to ensure that the negotiating parties consider the balance between protecting intellectual property rights and data protection and privacy rights, rather than data protection and privacy issues being considered at the end. Hustinx particularly wants safeguards to apply to all data transferred out of Europe to countries that do not provide strong enough protection on data protection issues. Hustinx would like to see a public and transparent dialogue on Acta.

A recent Court of Appeal decision has the effect that in some circumstances a company which a holding company considers to be its subsidiary may not in fact be its subsidiary.

Statutory background

Section 736 of the Companies Act 1985 (1985 Act) states that a company is a “subsidiary” of another company (its “holding company”) if that other company:

• holds a majority of the voting rights in it
• is a member of it and has the right to appoint or remove a majority of its board of directors
• is a member of it and controls, alone, pursuant to an agreement with other members, a majority of the voting rights in it,

or if it is a subsidiary of a company which is itself a subsidiary of that other company.

A company is an “affiliate” of another company if they are both subsidiaries of the same holding company.

The substance of the relevant provisions of the 1985 Act is reproduced in the new Companies Act 2006 (2006 Act) so the decision applies equally to the definitions of “subsidiary” and “affiliate” in the 2006 Act.

Factual background

Enviroco Ltd (Enviroco) was an affiliate of Asco UK Ltd (Asco UK) by virtue of having the same holding company (Asco plc). Farstad Supply A/S (Farstad) chartered a ship to Asco UK. Enviroco was engaged to carry out maintenance work on the ship.

Asco plc “pledged” its shares in Enviroco to a bank by a Scottish law “deed of pledge”. Pursuant to this pledge, Asco plc’s shares in Enviroco were registered in the name of the bank’s nominee. The deed of pledge made it clear that the registration of the bank’s nominee as the holder of the shares was for the purpose of security only, and the voting rights remained with Asco plc.

A fire then occurred, causing damage and the death of an Enviroco employee. Farstad brought proceedings against Enviroco, who tried to protect itself against the claim by using an indemnity clause in the charter-party agreement. The indemnity clause only applied to Asco UK’s “affiliates” so the High Court had to decide as a preliminary issue whether, as a result of the share pledge and the registration of the bank’s nominee as the holder of the Enviroco shares, Asco plc had ceased to be a holding company of Enviroco (and therefore whether or not Asco UK and Enviroco had ceased to be affiliates of one another).

High Court decision

The High Court held that “as a matter of commercial common sense” the registration of the shares in the name of the bank’s nominee was only for the purpose of giving effect to the bank’s security. Asco plc had therefore retained control of Enviroco, meaning that Enviroco was a subsidiary of Asco Plc (and an affiliate of Asco UK) and could benefit from the indemnity.

Court of Appeal decision

Farstad appealed to the Court of Appeal, which overturned the decision of the High Court. Its rationale was that, although it did not necessarily make sense to decide that Enviroco had ceased to be a subsidiary of Asco plc, the Court was limited in the extent to which it could correct errors in the 1985 Act (or any other Act of Parliament).  In the circumstances of this case, section 736 of the 1985 Act had to be interpreted to mean that Enviroco had ceased to be a subsidiary of Asco plc (and an affiliate of Asco UK) and therefore Enviroco could not benefit from the indemnity.

Comment

Until such time as the law is clarified by the Supreme Court when it hears Enviroco’s appeal against the Court of Appeal decision, English companies should be wary of granting legal mortgages over shares and instead grant security over shares by way of equitable charge (as tends to be the usual practice anyway).

The definitions of “subsidiary” and “affiliate” in contracts and finance documents commonly cross-refer to the definitions in the 1985 Act (or the restated definitions in the 2006 Act). Group companies should therefore check their contracts and finance documents and, if the statutory definitions are referred to, seek advice as to whether or not the case impacts on their activities.

Enviroco Ltd v Farstad Supply A/S [2009] EWCA Civ 1399

The policy principles

Competitiveness - The Government will ensure that the UK remains an attractive location in which and from which to do business.

Fairness - The Government will seek to ensure fairness within and across the tax system, so that businesses pay their fair share of tax.

Minimising distortions – The Government will seek to maintain a tax system that minimises distortions to commercial decisions, while recognising that the tax system can have a role in supporting the UK’s competitive strengths and addressing market failures.

Simplicity – When developing and reviewing business tax policy, the Government will consider simplicity alongside other policy objectives, and will seek to avoid unnecessary complexity when designing and developing new business tax legislation.

Stability and certainty – The Government will avoid unnecessary changes to tax legislation. Where the Government proposes to amend legislation, it will set out the policy reasons for doing so and explain how the amended legislation will deliver these policy objectives.

Tax administration / Compliance costs – The Government will maintain its commitment to lowering compliance costs for business, while balancing this with the need to operate a cost-effective tax administration. It will continue to improve tax administration by developing the approach set out in HMRC’s Review of Links with Large Business and, for small and medium sized enterprises, in Delivering a New Relationship with Business.

Comment

There is a clear case for creating certainty for businesses. Indeed, in my experience, businesses are more interested in a jurisdiction with stability and a good infrastructure, than on the actual rates of tax (not to say that these aren’t important too). Nobody wants to invest time, effort and money in creating a structure for their business, only to find that 2 years later it doesn’t work because rules have changed.

It does, however, seem incongruous that a policy which is intended to represent stability contains an explicit reference to anti-avoidance rules. “Minimising distortions” is an un-veiled reference to the standard justification for bringing in changes to prevent tax avoidance. Anti-avoidance rules invariably create complexity, confusion and unintended consequences.

So, this policy does have the potential to be really useful and to attract business to the UK. The UK remains a great place to operate from and is still a global leader in the world of finance. Anything that the Government can do to improve our reputation is welcome.

Our guest speaker will be Shimshon Silkin who will be talking about leaving one’s comfort zone and overcoming personal limitations. The meeting will be sponsored by Matthew Arnold & Baldwin LLP.

The WJBC is a, free, informal networking event that takes place bi-monthly. The format is a buffet networking lunch (kosher) followed by a presentation. It is a joint project of MAB and Watford United Synagogue.

Parking is available in the Watford and District Synagogue (5 minutes walk away) and in Watford Junction station car park, across the road.

Time: 12.30 – 13.30
Location: 21 Station Road, Watford, WD17 1AP

If you would like to attend please email wjbc@mablaw.co.uk to reserve a place.

The information required in a HIP for new build homes is very similar to that required for older homes. However, you will need to ensure that you consider whether the property is being sold off-plan and then take this into account with the information contained in the HIP. For example, with properties sold off-plan you will be unable to obtain an Energy Performance Certificate (EPC), as these can only be produced on properties that are available for inspection. Therefore, you will need to provide a Predicted Energy Assessment (PEA). The PEA will be based upon the specifications for the property and should be upgraded to an EPC once the property is build complete and it has still not been sold.

A new home is defined in the Home Information Pack (No. 2) Regulations 2007 as a home that is being designed or constructed, or a home that has been constructed but that has never been occupied. This definition does not include converted properties.

What a new home HIP must contain

 A new home HIP must contain the following:

1. An index;
2. A Property Information Questionnaire (specific to the plot);
3. An EPC or PEA;
4. A Code for Sustainable Homes certificate or interim certificate;
5. A sale statement;
6. Evidence of the title;
7. A copy of the proposed lease (if selling a leasehold property); and
8. Searches – local search and standard water search.

Developers are unable to begin the marketing of a property until all of the required elements of the HIP have been requested and paid for (or at least a commitment to pay for them has been made.) You must also have the basic HIP information available before marketing a property. The basic information required for marketing are the index, Property Information Questionnaire, EPC/PEA, sustainability certificate, sale statement and evidence of title. Once this information has been complied, the HIP is ready to market, albeit not a complete HIP. You then have 28 days in which to ensure that the completed HIP is available.

When is a new home HIP required?

If you sell the plots on a development individually, they will each require a HIP. However, if you are selling completed dwellings to another developer then you will not normally require a HIP, as you have not offered the property for sale on the open market. You will, however, still require an EPC for each plot sold as a completed dwelling.

Sales to a registered social landlord are also generally exempt but the regulations on this are far from straightforward.

Should you sell a portfolio of properties, these are generally exempt from HIP requirements under regulation 30 of the Home Information Pack (No. 2) Regulations 2007. For example, if you sell two or more properties to an investor under a single or multiple contracts, and indicate within the terms of the sale that you would not have accepted their offer on the properties in isolation and make this clear when marketing, then no HIPs are required for the subject properties. There is also no HIP requirement for mixed-sales under these Regulations.

Only homes marketed to the public require a HIP, even if the home is offered on a shared-ownership or shared-equity basis.

Code for Sustainable Homes

From 1^st May 2008, where the local authority has received a building notice, initial notice or full plans application the new homes involved must have a Code rating. The Code uses nine categories for measuring the sustainability of a new home. However, assessing a property against the Code is not compulsory, but you must ensure that the HIP either contains a nil-rated certificate if the home has not been assessed, or if the home has been assessed against the Code then a rating must be included.

Availability of the HIP

Any potential buyers are entitled to a copy of the HIP or any part thereof if they request the same. You have 14 days from the request in which to provide them with the information, and you should make no charge for providing the information to them unless they request the same in paper form. You can then make a reasonable charge for copying and postage.

Whilst you are marketing the property continuously there are no requirements for you to update any of the information contained within the HIP, except that you must replace the PEA with an EPC should the property be completed prior to sale.

The legislation surrounding HIPs can be very complex and this article simply scratches the surface. If you have any questions regarding the legislation relating to a particular development or new home then please do not hesitate to contact me on helen.chaproniere@mablaw.co.uk and I will be happy to help and advise.

Under changes to UK data protection law expected to take place in April this year, the Information Commissioner’s Office – the regulator in charge of enforcing data protection law in the UK – will be able to fine organisations up to £500,000 if they discover a serious breach of the Data Protection Act. The breach must be of a kind likely to cause substantial damage or distress, and either the organisation must have deliberately breached the Act or it should have known of the risk and the likely substantial damage or distress but still failed to take reasonable steps to prevent it. The ICO has issued guidance as to how high it would make the penalties. The ICO would consider a number of factors, including:

• How serious the breach was.
• How likely damage was.
• Whether the breach was deliberate or negligent.
• What steps the organisation had taken to safeguard the data.
• The organisation’s resources and size.

In the case of The City of Edinburgh Council v Dickson, the disciplinary allegation against Mr Dickson, a community working and development worker at a High School in Edinburgh, was that he had been seen by a number of adults and children viewing “seriously pornographic” material on a computer at the school.  His defence to the allegation was that he had no memory of any such incident and could only assume that his conduct and the lack of memory of it were both caused by a hypoglycaemic episode relating to his type-1 diabetic condition. Both the manager making the initial decision and the councillor who dealt with the appeal did not believe Mr Dickson’s explanation and he was dismissed for gross misconduct.

Mr Dickson issued claims for unfair dismissal and disability discrimination. Both claims were successful at the tribunal. When the Council appealed, the EAT overturned the disability discrimination decision, holding that the fact that Mr Dickson was a diabetic did not influence the way that the Council reached its decision to dismiss at all.

However, the unfair dismissal finding was upheld. The main reason for this is that the Council “failed to engage” in the explanation offered by Mr Dickson at all. In other words, the Council decided that Mr Dickson was lying without taking proper steps to understand the evidence that was available about his medical condition. Both the tribunal and the EAT were less than impressed that the the manager conducting the disciplinary meeting seemed to have relied on (incorrect) advice provided by the Council’s HR adviser, second-hand from the adviser’s wife (who happened to be a pharmacist) that a hypoglycaemic episode could not result in out of character behaviour or memory loss.

The striking thing for me about this case is that with a little more care the employer could have reached exactly the same conclusion and not been liable for unfair dismissal. The reason why is explained in the EAT’s judgment, “[I]t was in principle plainly open to [the Council] to disbelieve [Mr Dickson's] explanation… Thus, if it were shown that [the Council] had engaged with the Claimant’s defence but had reached a considered view that it should be rejected, it is hard to see how that conclusion could be said not to have been open to it… [The Council] had simply not taken the defence seriously”.

The Commission has just updated the rules and data export contract terms that apply when a European data controller transfers data to a data processor that is not based in the EEA. A ‘data controller’ is someone who decides and controls what happens to personal data, and a ‘data processor’ is someone who processes personal data on behalf of a data controller but does not take decisions in relation to the personal data and is not ultimately responsible for that data. The new rules allow for the data processor to sub-contract the processing of the data to sub-processors under certain conditions, including by obtaining the prior written consent of the data controller that is exporting the data out of the EEA. The development is aimed at keeping pace with the way business is done, and in particular different levels of outsourcing in a chain.

Separate contract terms continue to exist in relation to transfers of data from data controllers within the EEA to data controllers outside of the EEA. They are unaffected by the updated contract terms in data controller to data processor situations.

The Court of Appeal disagreed. It said that the crucial factor was that a substantial measure of the activities had taken place in England. The material had been prepared in England, uploaded onto a web site from England and this had been done in the knowledge and expectation and intent that the material should be available to the English public. In particular, there had been references for how people in England could obtain the materials by post.

The Court also dismissed the defence’s argument that there had not been actual publication in England until it could be proved that people had read the materials. The Court said that any analogy with defamation laws – which had applied a similar test – was flawed. Defamation was a civil wrong which considered the damage done to someone’s reputation. This case involved criminal law, where the mere posting was enough to break the law.

The justification of this is that the programme will raise awareness among small businesses that they need to keep good records. The show will aim to help Britain’s small businesses improve their all round business knowledge and direction, cash flow, marketing strategy and in some cases even their enthusiasm.

The show will start in March, but if you can’t wait until then the good news is that here at MAB we have a business health check product which might prove even more useful than a TV show….Click here for info on our Business Healthcheck

The background to the claim is that Ms Eweida was a devout practicing Christian, who had worked part-time on BA’s check-in desk since 1999. In 2004 BA changed its uniform from a high-necked blouse to a uniform that incorporated an open collar, but forbade the wearing of any jewellery around the neck. In 2006 Ms Eweida twice wore a small cross on a chain around her neck and, when challenged, removed it. The third time she wore the cross, she refused to remove it and was sent home. She remained at home on unpaid leave from 20 September 2006 until 3 February 2007 after BA changed its policy to allow the wearing of a faith or charity symbol. She is still employed by BA.

Ms Eweida issued various claims against BA alleging harassment and both direct and indirect discrimination on the grounds of her religion. These included a claim that not allowing her to wear the cross around her neck was indirectly discriminatory of her as a Christian because it was a “provision, criterion or practice” (”PCP”) which although it was applied equally to all BA staff, put persons of Ms Eweida’s religion or belief at a particular disadvantage. None of those claims were upheld either at the initial Employment Tribunal or at the Employment Appeal Tribunal.

The only ground of appeal pursued by Ms Eweida in the Court of Appeal was that the Employment Appeal Tribunal had been wrong to find that in order for her indirect discrimination claim to succeed, Ms Eweida was required to show that she was part of a group of people within the BA workforce who were disadvantaged because their religion or belief made it harder to comply with the PCP applied by BA. Ms Eweida’s argument was that it should be enough to show that she alone suffered that disadvantage on the grounds of her religion.

In refusing to uphold her appeal, the Court put significant weight on the tribunal’s findings that the detriment which Ms Eweida complained of was suffered by her alone and her complaint arose from a personal objection neither arising from any doctrine of faith, nor interfering with her observance of it and never raised by any other BA employee. The Court also held that there must be some element of disadvantage to a group (even a potentially small one) in order for there to be indirect discrimination.

The case provides useful guidance to employers on an issue which has been the subject of numerous cases in the tribunals since religious discrimination laws were introduced in 2003,  though there will no doubt be further litigation in relation to dresscodes and appearance in the context of employment.  Lord Justice Sedley was at pains to point out that this case was not about whether BA had adopted an anti-Christian dress code, treated other religions more favourably or harassed Ms Eweida because of her beliefs. It will be interesting to see if that is how the case is presented in the wider news media.

For those who want a little more detail, the Court of Appeal’s judgment is available at http://www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWCA/Civ/2010/80.html&query=eweida&method=boolean.

The Corporate Manslaughter and Corporate Homicide Act came into force in April 2008. It created a new offence of corporate manslaughter, committed by organisations rather than by individuals. The Sentencing Guidelines Council has now published definitive guidelines on the sentences which an organisation convicted of corporate manslaughter (or a health and safety offence causing death) can receive.

Sentencing guidelines

The guidelines list the following type of sentence:

• Fine
• Remedial order
• Publicity order

Fine

The guidelines confirm that the appropriate fine for a conviction of corporate manslaughter “will seldom be less than £500,000 and may be measured in millions of pounds”. Where a health and safety offence has caused death “the appropriate fine will seldom be less than £100,000 and may be measured in hundreds of thousands of pounds or more”.  The guidelines expressly state that in a “bad case”, it may be appropriate for an organisation to be put out of business.  However, the guidelines do acknowledge that imposing high levels of fine on the public and not-for-profit sectors may have an adverse effect on the services provided by such sectors.

Remedial order

A remedial order will require an organisation to address specific failings which were involved in the offence. The court will not take into account the cost of complying with a remedial order when setting any fine which also forms part of the sentence.

Publicity order

The object of a publicity order is “deterrence and punishment”. Such an order may require details of the conviction, such as the amount of the fine and the terms of any remedial order, to be made public.

Comment

The guidelines confirm that there may be hugely detrimental implications (both financial and reputational) for organisations that are found guilty of corporate manslaughter.

I will be celebrating the Year of the Tax Hike, which is due to start on 6 April.

Anyone with a better name, please share your wit and wisdom by emailing me or commenting on this post with suggestions. There is no prize (times are tight, you know) but you will benefit from the kudos that attaches to such things…

The year of the Tiger signifies bravery. The year of the Tax Hike signifies increases in tax for individuals with income over £150,000 and for trustees (whatever the trust’s income); and the gradual reduction in personal allowances for those with income over £100,000. And the year after, NICs will be increased by 1%.

What to do?

There are several ideas which can be utilised to reduce the impact of these changes. These can be summarised as follows:

Accelerate

Income (e.g. bonuses or dividends) which would otherwise have been paid in 2010 / 2011 might be brought forward to this year (i.e. before 6th April). You will still suffer tax but this simple step will give rise to tax of 40% rather than 50%. The employer will need to agree to this, since it will also need to pay PAYE and employers NICs earlier than possibly anticiapted. If your employment status is tenuous, don’t expect your employer to agree….

Defer

You may want to defer allowable expenditure and reliefs until next year. Alternatively defer might mean hold off on making payments out of companies until tax rates reduce. This is only suitable for owner managed businesses and will need to be kept under review.

Restructure

There are tax efficient structures which can be utilised to reduce overall rates of tax. These should only be undertaken with proper professional advice. Some of these are quite strightforward such as careful use of tax approved employee share incentives, e.g. EMI options. Another well trodden path is to address the balance between spouses, when one spouse or civil partner will be a 50% taxpayer and the other will pay tax at a lower rate. Income producing assets can generally be transferred between spouses with no capital gains tax or inheritance tax implications but often the income tax benefits are surpising.

Invest

The EIS and VCT schemes (possibly combined with pensions planning) can be used to reduce your effective rate of tax. This is only of use if you have cash to invest. Further, you will need to take proper investment advice to ensure that a particular investment is suitable for you. Note, some providers offer “protected” EIS and VCT investments with a lower risk profile.

Watch this site for some more ideas on how to beat the tax man and steps which should be considered before we usher in the new year.